Abstract

South Korea's Pohang Steel Co. (POSCO) is one of the largest steel makers in the world. As Korea has little native iron ore or coal, POSCO mostly purchases its iron ore and coal from Australia, Brazil, Canada, China, India, and Russia. POSCO, is now looking at India as a major source of iron ore. But after the company's announcement in March 2005, that it will set up a big steel plant in Orissa, with an annual capacity of more than 10 million tons, there has been stiff political opposition to the deal. After several rounds of discussions between POSCO and the Orissa Government, the MoU has been finally signed, clearing the way for the largest foreign investment ever in India. Work is expected to begin in 2007. POSCO has now requested grant of SEZ status. Will the permission be given? Will there be fresh political opposition to the deal? Will the deal be beneficial for both the countries? Will POSCO achieve its promised targets? These are the questions, which POSCO management is pondering in the middle of 2005.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

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Keywords

Pohang Steel Co., Posco deal, Posco's entry to India, Orissa, Steel plants in India, Posco MoU, SEZ Status, Political opposition and Controversy over the posco deal